Hot Topics for Trial Lawyers

A compilation of journalistic articles to keep you abreast of changing developments and current events in the litigation realm. If you are interested in writing for this Hot Topics segment, email tnuckols@texasbar.com

TOPIC:

Texas Supreme Court Update On Insurance Cases

Posted 4/27/09  

In Tanner v. Nationwide Mutual Fire Insurance Co., ______ S.W.3d _____, the Texas Supreme Court interpreted the intentional exclusion in Nationwide's auto liability policy. The Court reversed and rendered judgment for the plaintiff.

Nationwide was sued by the Tanner family for the actions of its insured, Richard Gibbons ("Gibbons"). Gibbons led the police on a high-speed chase through San Marcos that resulted in a traffic accident with the Tanner family. Prior to the accident, Gibbons slammed on his brakes but failed to avoid the collision. The members of the Tanner family suffered injuries as a result of the accident.

Initially, the Tanners filed suit against Gibbons and obtained a default judgment. However, Nationwide, Gibbons' insurer, refused to pay damages and filed a declaratory judgment action claiming that the intentional-injury exclusion in their policy barred coverage for Tanners' claims. Despite their assertion, the jury found that Gibbons did not intentionally cause the Tanners' injuries. Thereafter, the trial court granted Nationwide's motion for judgment notwithstanding the verdict. The court of appeals affirmed the trial court's judgment because the intentional-acts exclusion in Gibbons' policy with Nationwide excluded any coverage for the Tanners' claims as a matter of law.

In its analysis, the Court determined that Nationwide was required to show that the evidence conclusively proved that Gibbons intentionally injured the Tanners and that no reasonable jury would come to a different conclusion. Nationwide asserted that once Gibbons fled the police, his actions voided the coverage under the policy's intentional-injury exclusion. This exclusion withholds coverage for "property damage or bodily injury caused intentionally by or at the direction of an insured, including willful acts the result of which the insured knows or ought to know will follow from the insured's conduct."

The Court emphasized that the word intentionally as used in Nationwide's exclusion speaks to the resulting damage or injury, but not to the actions that led to it. The language should be considered effect-focused and not cause-focused, and void coverage when the resulting injury was intentional, not merely when the insured's conduct was intentional.

In application to the underlying facts, the Court stated the evidence at trial did not indicate that the property damage and injuries to the Tanners was intentional by Gibbons. Instead, the evidence demonstrated that Gibbons slammed on his brakes to avoid impact which showed that he tried to avoid the collision and any harm. The Court further noted that Gibbons' high speed chase could have ended in several different scenarios, and as a result, Nationwide failed to establish as a matter of law that the Tanners' injuries were caused intentionally per the policy exclusion.

The Court also discussed additional language in Nationwide's policy exclusion which excludes coverage for "willful acts the result of which the insured knows or ought to know will follow." The Court felt that this policy language also reiterates the view of inquiry as to whether the insured intended to inflict damage or injury. In order to forfeit coverage, the insured must intend to harm and not intend to act. The Court stated this portion of Nationwide's exclusion denies coverage if the insured "ought to know" that injury "will follow" his actions. The jury charge used in the trial court tracked the language in this exclusion, and Nationwide did not object to such language in the charge. The Court concluded it had to review the policy as written, and considering the clarity of the exclusion and jury charge, the Court could not conclude that jurors disregarded the policy and the evidence in reaching their verdict.

Here, Nationwide's exclusion is more restrictive than other policies. It will be interesting to see if intentional injury exclusions become broader than the one used by Nationwide.

William Allred, Cooper & Scully, P.C.